Bridge Financing

Bridge financing is a short-term interim financing that closes a liquidity gap until a planned subsequent event, e.g. a financing round, a sale or an IPO. It is frequently structured as a convertible loan and, in the case of start-ups, is used to bridge the period between financing rounds.

Key terms are the term, the interest rate, the conversion discount, the valuation cap and most-favoured-nation clauses. A bridge that runs too long without a clear onward perspective is not advisable.